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Saturday, December 07, 2019

Explained: Khadi gets HS code; but what does that mean?

The Harmonised System, or simply ‘HS’, is a six-digit identification code developed by the World Customs Organization (WCO).

Written by Om Marathe , Edited by Explained Desk | New Delhi | Published: November 10, 2019 8:37:52 pm
Explained: Khadi gets HS code; but what does that mean? The move is expected to boost Khadi exports in the coming years. (Representational Image)

On Wednesday, the Ministry of Commerce and Industry allocated a separate Harmonised System (HS) code for Khadi, India’s signature handspun and handwoven cloth that was made iconic by Mahatma Gandhi during the freedom struggle. The Ministry of Micro, Small and Medium Enterprises (MSME) in its press release said, “Khadi has once again come out of its customary veil, marking its presence in the exclusive HS code bracket, issued by the central government on November 4, 2019, to categorise its products in export.”

What does the HS code mean?

The Harmonised System, or simply ‘HS’, is a six-digit identification code developed by the World Customs Organization (WCO). Called the “universal economic language” for goods, it is a multipurpose international product nomenclature. Over 200 countries use the system as a basis for their customs tariffs, gathering international trade statistics, making trade policies, and for monitoring goods. The system helps in harmonising of customs and trade procedures, thus reducing costs in international trade.

According to the WCO website, the system currently comprises of around 5,000 commodity groups, each identified by a unique six-digit code that has numbers arranged in a legal and logical structure, with well-defined rules to achieve uniform classification. Of the six digits, the first two denote the HS Chapter, the next two give the HS heading, and the last two give the HS subheading.

The HS code for pineapple, for example, is 0804.30, which means it belongs to Chapter 08 (Edible fruit & nuts, peel of citrus/melons), Heading 04 (Dates, figs, pineapples, avocados, etc. fresh or dried), and Subheading 30 (Pineapples).

What does this mean for Khadi?

The move is expected to boost Khadi exports in the coming years.

In 2006, the government had given the MSME-controlled Khadi and Village Industries Commission (KVIC) the Export Promotion Council Status (EPCS). Yet, the absence of a separate HS code hindered Khadi from achieving its full potential, as its exports were difficult to categorise and calculate. The latest move is expected to help resolve this issue.

Vinai Kumar Saxena, Chairman of the KVIC, said that the decision of the government would open a new chapter in Khadi export, and credited Union Ministers Nitin Gadkari, Piyush Goyal, and Nirmala Sitharaman for taking a personal interest in the move. He said, “Earlier, Khadi did not have its exclusive HS code. As a result, all the data regarding export of this signature fabric used to come as a normal fabric under the textile head. Now, we will be able to keep a constant eye not only on our export figures, but it will also help us in planning our export strategies.”

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